Bad Credit Second Mortgage: Is It Possible?

If your home has equity, that is if your home is worth more than the remainder of what you owe on your mortgage, you can take out another loan using that home as collateral. These loans are sometimes refered to as second mortgages. When you have good credit and a lot of equity banks practically line up begging to give you these types of loans which also tends to be slightly higher interest than their regular mortgages. The problem is that the people who usually need to take out a loan using the value of their house are the people who need a little extra money and more often than not have bad credit.

When you have bad credit getting a second mortgage can be a big problem. You are considered a much higher risk in two ways- first because you have bad credit the lender will assume you have either defaulted on loans in your past making you more likley to do it again, or you owe too much money on other loans, bills and credit cards, making you more unlikley to be able to pay the loan back. On top of that by law if you cannot afford to pay your house off anymore, by law all the equity in the home goes to the first lender, if and only if there is any more value to the home the lender ofthe second mortgage gets their money. Because of these reasons getting a bad credit second mortgage with good rates are very hard.

When shopping for a bad credit second mortgage find out what federal programs are available to help out struggeling homeowners cope. In recent months billions have been spent by ederal, state & local governments in an attempt to help struggeling homeowners from falling into forclosure. Many other websites claim to be able to help people with bad credit get a second mortgage but be sure to read the fine print, make sure that the interest rate is fixed and not too much above the rate for first mortgages (although a few parts of 1 percent is fine) because or every $100,000 one percent a year is another $1000 and after 30 years that's a whole lot of money! Also, see if it will need to be insured by an underwriter which will cost you hundreds more a year and try to ask an educated 3rd party professional for advice before just jumping in

good luck with your mortgage shopping!